Hi, As such we three brother have bought 12 Acre Agriculture land in Peri Urban Zone in 2005 which on single sale deed and in 2007 we signed a release deed by demarcating the land and released one of our brothers to the extent of 3 Acre 20 Guntas. Later, we convert our share 7 Acre 23.5 Guntas to Non- Agriculture in 2007 to give the land as collateral to bank for loan to start a manufacturing plant. Now in 2023 we cleared the loan and intend to change the land use from Peri Urban to Industrial Zone and sell the same. Our question is if there is any capital gain exemption on the same.
Assuming at the time of sale of land, it is owned by the individuals as mentioned in the question. You can avail the benefit u/s 54EC or 54F.
u/s 54EC you can invest in the notified bonds within 6 months from the date of sale of the asset. maximum exemption available is Rs. 50 lacs
u/s 54F you have to invest in a residential house property subject to stipulations
For detailed discussion you may opt for phone consultation
Hello,
In your case, to potentially avail of capital gains tax exemptions, you can consider the following options:
Section 54EC: If the land was held for more than 3 years, you have the option to invest the capital gains from the sale into specified bonds, such as those issued by NHAI or REC, within 6 months of the sale. The maximum exemption available under this section is Rs. 50 lakhs.
Section 54F: This section allows an exemption from capital gains tax by investing the sale proceeds (not just the capital gains) in a new residential property. However, this option may not be applicable if you intend to use the land for industrial purposes.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
As per my opinion there is no capital gain exemption on this transaction unless we can classify as industrial land under long term than benefit under section 54F i.e. residential property investment can be explored but it can be determine only based on documents created at each point
